I look at the Republicans and they are scary. All Republicans want to do is cut the deficit when we have 9.1% unemployment. In doing so, they have no immediate answer for the unemployed. I think they are all for the Balanced Budget Constitutional Amendment (I am for a balanced budget “over a business cycle”… legislating a balance budget is crazy! Think about what would happen if we balanced the Budget today – 12 % unemployment?). They also want to deregulate to "create jobs" as if Obama created a massive amount of regulations in 2 years showing no evidence.
Many find running a permanent campaign is distasteful but necessary to counteract a determined opposition who will say anything to win.
I wrote a Dairy “They never gave Obama a chance” where I recalled all the Republicans who were against Obama from the beginning. My Senator Mitch McConnell said his number 1 goal is to make Obama a “ one termed President”. The day Obama was inaugurated, Top GOP lawmakers and strategists plotted to oppose every Obama initiative ... See Robert Draper's Book "Do Not Ask What Good We Do: Inside the U.S. House of Representatives." and Great Post by keepthemhonest
Obama’s Mistakes :
• Economic Projections :
Before Obama came into office, his brilliant economic team had to estimate economic growth (or contraction) as well as unemployment in order to do US Government projections. They estimated unemployment to increase to 8 % which was relatively in line with other private economists such as the Blue Chip Economists (Page 34). One of the Republican lies is Obama “promised” unemployment would just reach 8%. The Obama administration never promised unemployment would not go above 8% - It was an estimate!
Obama made a major mistake of not saying this economic crisis was unprecedented thus we do NOT know how bad it will get. As Roosevelt said (AND Obama should have said) “ we will try everything to bring us out of this recession. There may be mistakes in the process but we will never stop until we are out of this recession.” As soon as unemployment reached above 8% (and 9%), Obama should have said, “we made a mistake. The crisis is much worse than we thought.” The reason why they never said anything is they wanted to project optimism. Plus the Republicans would hit them anyway.
. They should have proposed a new stimulus the summer of 2009.
• First Stimulus::
To combat the recession, Obama let Congress develop a stimulus package. Many thought the package was much too modest such as Paul Krugman. I took his suggestion that the stimulus should have been twice as large. (In December of 2009, Obama's economic team were drafting a stimulus proposal. Christy Rommer drafted a memo proposed $1.7 to $1.8 Tr to solve the ouput gap. Unfortunately, she was overruled by Larry Summers so Obama never saw the alternatives.) Even though much of the stimulus was tax cuts (read Republicans), the public was not aware their taxes were cut. That’s probably because Obama let Congress construct a Rube Goldberg bill. He should have proposed his own bill. The bill should have been simple and straight forward such as:
• Payroll Tax Holiday – both on the employee side and employer side. A more effective multiplier effect would be to except higher incomes from the employee side of the tax holiday.
• Unemployment tied to a ceiling unemployment rate … say 8% so you would not have to keep coming back to extend coverage. (As a side note there are 4.6 unemployed for every job opening!)
• Pay for outreach to sign up people for Food Stamps until the unemployment rate is below 8% .
• Pay for X % (10 - 20%) of the State part of Medicaid until the unemployment rate is below 8% . This would free up money for the states to retain teachers, etc.
• Setup a permanent infrastructure bank for our crumbling infrastructure.
By having a “simple” bill, it would have been easier to explain the to American people. A Payroll Tax Holiday would have been a major cut in the average person’s pay check – easy to explain. Obama could have hammered this as part of the permanent campaign. It would have been difficult for Republicans to lie about the package (besides there were quite a few Republicans which were for the Payroll Tax Holiday).
The bill should have been “negotiated” with the Republicans on the stimulus. He should have had a weekly meeting with the Republican and Democratic leadership in Congress. When constructing the stimulus package, he should have put the Republican Leadership on the spot “Ok Mitch, I am going to proposes a $1.5 trillion dollar stimulus with 100% being spending. What is your position?” He should have forced Mitch McConnell to give an alternate position.
If he didn’t get the massive $1.5 trillion dollar stimulus package, he should have blamed the Republicans (over and over) for the economy not growing. Keynes would have worked if the stimulus was large enough…. Massive government spending got us out of the Depression – the New Deal and World War II. He should have countered the Republican message that the New Deal didn’t work
We know now the Republicans were NEVER going to vote for any stimulus (read Obama bill). He should have forced Mitch to make a public position and showing the Republicans as unreasonable. “We met with Republicans every week. We tried to negotiate … be bipartisan but he Republicans believe in “My way or the Highway.””.
By appearing to be bipartisan, Obama could have set the stage for the next stimulus package. He should have hammered them for their obstruction
Instead of recognizing Republicans would never be bipartisan, he never pressed the issue. He either wanted to appear to be a nice guy or he hates conflict… Big Mistake!
(80% of Economist surveyed by University of Chicago believed the Stimulus worked)
• Healthcare Reform::
Watching the construction and final passage of the “Affordable Care Act” was extremely painful. Obama tried to learn the lesson of Clinton’s Healthcare problems by turning the process over the Congress rather than the top down approach.
The consequence was a yearlong of “sausage making “, Republican Lies (Death Panels) and little response from the Obama administration. I think the best (worst) example of the process was the Max Baucus’ America’s Healthly Future Act. Max had his own “Gang of Six” including my favorite Chuck “pull the plug on grandma “Grassley. I used to respect Grassley until he lied on 8/12/2009 supporting the unsupportable – Death Panels. There was no aggressive response to this lie from Obama which allowed the Republicans to hammer the “middle of the Road” Healthcare bill. By middle of the road, I mean there was:
• No Public Option.
• Mitt Romney passed a similar law in MA. Many Republicans in the past supported similar positions.
Republicans paid no price for obstructing and lying about the “Affordable Care Act”. Clearly the President is responsible for not combating Republican Obstructionism and lies. As soon as the “Death Panels debate” (Lies), began, the Obama administration should have known:
• Republicans were never going to vote for an Obama Healthcare Bill (Go Figure… this is the whole point of the post).
• Republicans will lie over and over to break Democrats.
With no systematic response to Lies, false statements become the truth thus the need for the permanent campaign.
What Obama should have done is recognize in 8/2009 there were no Republicans who wanted to negotiate on Health Reform. He should have seen the futility of negotiation.
He should have slammed the lies immediately. He should have taken over the Bill in August – Max’s Baucus negotiations with Republicans were a waste of time.
In retrospect, it would have been easier to propose “Medicare for All” and expansion of Medicaid. This law would have been:
• Easier to explain, most people understand basic Medicare and Medicaid.
• Cost savings are greater than the “Affordable Care Act”.
• “Medicare for All” had over a 50% approval rating.
Healthcare Reform was never a priority with the American people. It was jobs, the economy and deficits. Every minute Obama spent on Healthcare reform was a minute sacrificed trying to generate more jobs. By not getting the Healthcare Bill completed quickly and not responding adequately to Republican opposition, Obama set the stage for the massive Democratic defeats in the 11/2010 elections.
• Housing Depression::
In my opinion, the House foreclosures are our main problem. Whatever Obama has tried has not put a dent in the problem.
What the Obama administration has tried is:
Home Affordable Modification Program (HAMP)
Trial launch: March 2009
Borrowers affected: As of May 2011, there have been 1.85 million trial modification offers extended to borrowers since the program launched in March, 2009.
HAMP was a big early disappointment -- not only because it fell well short of initial promises to lower mortgage payments for 3 to 4 million borrowers but because so many of the borrowers who were issued modifications early on quickly re-defaulted on their loans.
Track record: The program's record has improved and re-default rates have dropped, but they're still troubling. As of March, more than 20% of all borrowers with HAMP modifications are at least two payments behind twelve months after their loans have been modified.
Only 633,000 borrowers have received permanent modifications and are still in those refinanced mortgages. That's compared to 756,000 trial modifications that have been cancelled, usually as a result of missed payments.
Still, there have been improvements, with borrowers earning permanent modifications more quickly and in higher percentages than before. The modifications have lowered borrowers' payments by an aggregate of $6.8 million, according to the Treasury Department.
Secretary Donovan also said yesterday that HAMP and other government foreclosure prevention programs have helped to create an infrastructure in which non-government mortgage modifications are processed. In fact, the number of non-HAMP modifications increased significantly in 2010 to 1.76 million.
Second Lien Modification Program (2MP)
Launch date: April 2009
Participation: 28,800 borrowers
The Second Lien Modification Program (or 2MP) provides assistance to homeowners who have a second mortgage or a home equity line of credit in addition to their primary mortgage.
Many potential mortgage modifications have run into roadblocks because lenders of home equity loans and lines of credit refuse to cooperate. After all, the first mortgage holder typically gets paid first when an underwater mortgage gets modified and there's often nothing left for the second lien holder.
Yet, second lien holders have to agree to a mortgage modification -- and to take a loss -- before a loan can be refinanced. Under 2MP, the government pays cash incentives to the lenders of the second loans so they will allow the refinancing to proceed.
Track record: So far, only 1,524 borrowers have had their second mortgages fully extinguished by their second loan lenders, with an additional 26,000 receiving a reduction in their principal. That's a far cry from the estimated one million or more that the program was created to help.
The average amount involved is more than $65,000 for a full elimination of a loan balance and about $6,000 for a partial elimination.
Hardest Hit States Fund
Launch date: February, 2010
The Obama administration set aside $7.6 billion in funding for states that were hit hardest by the economic downturn to be used toward foreclosure prevention.
Eighteen states and the District of Columbia currently participate in the program and each state can spend the money on programs they determine best meet the needs of their residents.
Since the funding was allocated, all of the states have now implemented their programs, according to Andrea Risotto, a spokeswoman for the Treasury Department.
The states have directed about 70% of their funds toward programs that help homeowners who've lost their jobs, she said. Another 20% is being used to reduce mortgage principal for borrowers deep underwater. Much of the rest will go toward outreach and foreclosure counseling and prevention programs.
Track record: Too soon to tell. The Treasury does not aggregate data and the states have not produced full reports yet. Risotto said, though, there's been a big uptick in the number of servicers volunteering to participate in the program.
Home Affordable Foreclosure Alternatives (HAFA)
Launch date: April, 2010
All HAFA agreements started: 17,781
Aimed at borrowers who are underwater on their mortgages and who've been denied a modification via HAMP, HAFA was supposed to be a last-ditch effort to help homeowners avoid foreclosure. They still, however, lose their homes.
The program pays cash to both the borrower and lender to encourage a short sale, a deal in which the bank accepts the proceeds of the home sale as full repayment of the mortgage debt, forgiving any loss.
The program includes deeds-in-lieu, which are agreements in which the bank takes back the home directly from the borrower as full repayment.
Track record: HAFA was also a disappointment, with few borrowers taking advantage of the program. Others who would have participated, were ineligible because they did not meet a 31% debt-to-income requirement for approval. Earlier this year, that requirement was lifted.
Principal Reduction Alternative (PRA)
Launch date: June 2010
Trial modifications started: 21,299
This program is for borrowers with loans that are not backed by Fannie Mae or Freddie Mac or insured by the FHA. It requires servicers to evaluate the benefit of reducing mortgage principal for loans in which the balance has exceeded the value of the home by 15% or more.
Loan servicers are not required to reduce the principal, just to consider doing so. The mortgages may be ones in the HAMP program.
Track record: With scarcely more than 20,000 participants, this program has yet to gain much traction. But for those who are eligible for the program, PRA can result in substantial savings. The average reduction in principal is nearly $70,000.
Home Affordable Unemployment Program (HAUP)
Launch: July 2010
Participation: Only about 10,000 borrowers are currently participating in the program
This program originally reduced or suspended mortgage payments for unemployed borrowers for up to three months, but on Wednesday, the Treasury Department announced it would extend that for up to 12 months.
Track record: Participation has been limited. The GSEs, Fannie Mae, Freddie Mac and the FHA, have their own forbearance programs and they represent a huge share of the market.
FHA Short Refinance
Launch date: September, 2010
This is one of the few programs designed to help borrowers who have remained current on their mortgage payments. If their servicers agree to write off at least 10% of the principal, underwater borrowers can refinance into a new FHA-insured loan.
The refinance will put them back in the black, at least on their first mortgage: The debt-to-value ratio has to exceed 97.75%. With any second mortgage factored in, it can't exceed 115%.
Track record: This got off to a very slow start, with only about 15 refinances done by early 2011. The program seemed to gain some traction this spring -- 23 servicers had signed up to participate -- when the House Financial Service Committee voted to kill it in March. It's future is in doubt.
Emergency Homeowner's Loan Program (EHLP)
Launch date: June, 2011
Loans affected: No data yet
This $1 billion program, which was recently launched by HUD, offers interest-free loans to homeowners who have been hit with a job or income loss and reside in one of the 32 states not covered by the Hardest Hit States program.
Loans are restricted to those who have a household income of $75,000 or less, or earn less than 120% of the median household income for a community. They must have missed at least three payments, be on the verge of losing their home and demonstrate the ability to resume payments once their period of unemployment ends.
Track record: This program just started and it's too soon to tell whether it will hit its target of helping 30,000 borrowers.
Unfortunately there are still millions of foreclosures which need to be resolved. Those homeowners who are too far behind need to have their Homes foreclosed in an efficient, legal manner. Since tax payers are on the hook for many of these loans, it may be better to Foreclose and turn the home into section 8 housing for rental – maybe to the existing Home owners if they can afford payments. The American people have a real problem “bailing” out delinquents but if we don’t this problem will drag on for years.
• Deficits::
Following the theme I used in the economic projections and the first stimulus Obama lost the message war allowing the Republicans to establish Deficits as the major problem and Obama as the cause.
Deficits do matter. But… not in 2011 – 2013~ Not only did Obama lose the message war but he totally bunged the response to how to control long term deficits. He rejected his own deficit commission instead of including some or all the recommendations in his FY2012 Budget. He needed to show in his 10 year Budget projections some move toward handling the massive deficit problem. I would have preferred he did so in 2009 to counter the Republican message.
• Where to go from here::
In my opinion, President Obama should:
• Resolve the Foreclosure problem by a combination of renegotiating loans where the owners have the capability of making payments and converting foreclosures into government housing.
• Propose a long term solution to the deficit problem.
• Keep hammering the “Do Nothing Republicans” for his 2nd Stimulus.
• Respond quickly and efficiently to the Republican message war. This is a political war so forget trying to be a “nice guy”.